CONTRACT NO. RD-91

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-03424A000200030052-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 39
• Document Creation Date: December 22, 2016
• Document Release Date: August 16, 2011
• Sequence Number: 52
• Publication Date: September 21, 1955
• Content Type: MEMO

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'"' "' `~~~~ Contract No,
CONFIDENTIAL
Agreement made this day ofd , between the United States of
America (hereinafter callthe Governmen represented by the Contracting
WFIEREA$, the Contractor maintains facilities for research and development,
and has available the services of qualified personnel; and,
W~REAS, the Government desires the Contractor to conduct certain research
and development work and construct whatever equipment or articles may be
hereinafter specified; and,
WHEREAS, the Contractor is w311ing to provide said facilities and qualified
personnel and undertake such work on a cost~lus-a-f ixed-fee basis as hereinafter
specified;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
"Contracting Officer" refers to the present Contracting Officer and his
successors in office. "Director" refers to the present Director of the Agency
and his successors in office,. "Authorized Representative" refers to any person
designated in writing as such by the Co~atractiag Officer or the Director, and
such person can act hereunder only in the limited respects and to the extent
specified in provisions of this contract wherein the term "Authorized Representa-
tive" is specifically used.
ARTICLE 2. SCOPE OF SUBJECT WOE.
. ._~
The Contractor shall supply the necessary qualified personnel, facilities,
and materials, and shall use its best efforts to: conduct the work specified in
the Schedule of this contract in accordahce with the specifications snd~or
drawings stated in the Schedule. The Contractor shall cooperate in
consultation and otherwise as may be practicable with the Contracting Officer
or his authorized representative upon the request of either. Monthly
progress reports showing expenditures of funds, funds committed, and funds
remaining, as well as an outline of the work accomplished under the Schedule
shall be furnished the Contracting Officer or his authorized representative.
Technical Reports, prepared in the manner normally practiced by the Contractor,
shall be furnished the Contracting Officer or his authorized representative at
such intervals as may be indicated in the Schedule. In addition, the
Contractor shall prepare specifications, drawings on reproducible masters,
and shall supply full int'ormation aonceraing the components, devices,
apparatus, and methods with which this contract is concerned, and shall
~?. ~ ~CONFIDENTiAL
ILLEGIB
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~r
C N FI DENTIAL
deliver them, together with all models developed hereunder, to the Contracting
Officer or his authorized representative upon their request. The Contractor
shall furnish a complete and final report of work under this contract, and
shall maintain records in which descriptions and illustrations of any inventions
made in this work shall be entered as they are made, with appropriate dates,
signatures, and witnesses.
ARTICLE 3. CHANGES.
The Contracting Officer may at any time, by a written order, make changes
in or additions to the drawings and specifications, issue additional instructions,
or require additional work within the general scope of the contract. If any such
change causes an increase or decrease in the estimated cost of, or the time
required for performance of this contract, or otherwise affects any other
provision of this contract, an equitable adjustment shall be made (i) in the
estimated cost or delivery schedule, or both, (11) in the amount of any fixed
fee to be paid to the Contractor, and (iii) in such other provisions of the
contract as may be so affected, and the contract shall be modified in writing
accordingly. Any claim by the Contractor for adjustment under this clause m~:ct
be asserted within sixty (60) days from the date of receipt by the Contractor of
the notification of change; Provided, however, That the Contracting Officer, if
he decides that the facts justify such action, ~aay receive and act upon any such
claim asserted at any time prior to final payment under this contract. Failure
to agree to any adjustment shall be a dispute concerning a question of fact
within the meaning of the clause of this contract entitled "Disputes." However,
nothing in this clause shall excuse the Contractor from proceeding with the
contract as changed.
ARTICLE 4. LIMITATION OF COSH.
(a) It is estimated that the total cost to the Government, exclusivz of
any fixed fee, for the performance of this contract will not exceed the
estimated cost set forth in the Schedule, and the Contra.etor agrees to use
its best efforts to perform the work specified in the Schedule and all obliga-
tions under this contract within such estimated cost. If at any time the
Contractor has reason to believe that the costs which it expects to incur.in
the performance of this contract in the next succeeding thirty (30) days, when
added to all costs previously incurred, will exceed eighty-five percent (596)
of the estimated cost then set forth in the Schedule, or if at any time, the
Contractor has reason to believe that the total cost to the Government,
exclusive of any fixed fee, for the performance of this contract will be
substantially greater or less than the then estimated cost thereof, the
Contractor shall notify the Contracting Officer in writing to that effect,
giving its revised estimate of such total cost for the performance of this
contract.
(b) The Goverrnnent shall not be obligated to reimburse the Contractor
for costs incurred in excess of the estimated cost set forth in the Schedule
and the Contractor shall not be obligated to continue performance under the
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contract or to incur costs in excess of the estimated cost set forth in the
Schedule, unless and until the Contracting Officer shall have notified the
Contractor in writing that such estimated cost has been increased and shall
have specified in such notice a revised estimated cost which shall thereupon
constitute the estimated cost of performance of this contract. When and to
the extent that the estimated cost set forth in the Schedule has been increased,
any costs incurred by the Contractor in excess of such estimated cost prior to
the increase in estimated cost shall be allowable to the same extent as if
such costs had. been incurred after such increase in estimated cost.
ARTICLE 5. ALLOWABLE COST, FIXED FEE, AND PAYMENT.
(a) For the performance of this contract, the Government shall pay to the
Contractor the cost thereof determined by the Contracting Officer to be allowable
in accordance with Part 2 of Section XV of the Armed Services Procurement
Regulation as in effect on the date oY this contract and the Schedule (herein-
after referred to as "Allowable Cost"), plus such fixed Yee, if any, as may be
provided for in the Schedule.
(b) Once each month (or at more frequent intervals, if approved by the
Contracting Officer) the Contractor may submit to an authorized representative
oY the Contracting Officer, in such form and reasonable detail as such
representative may require, an invoice or public voucher supported by a statement
oY cost incurred by the Contractor in the performance of this contract and
claimed to constitute Allowable Cost. Each statement oY cost shall be certified
by an officer or other responsible official of the Contractor authorized by
it to certify such statements.
(c) As promptly as may be practicable after receipt of each invoice or
voucher and statement of cost, the Government shall, except as hereinafter
provided and subject to the provisions of paragraph (d) below, make payment
thereon as approved by the Contracting Officer. After payment of eighty-five
percent (859ta) of the fixed fee set forth in the Schedule, as from time to
tame amended, further payment on account of the fixed fee shall be withheld
until a reserve of either (i) fifteen percent (1596) of the total fixed fee
or (ii) $100,000, whichever amount is less, shall have been set aside, such
reserve or the balance thereof to be retained until the execution and delivery
of a release by the .Contractor as provided in paragraph (e) hereof.
(d) At any time or times prior to final payment under this contract
the Contracting Officer may cause to be made such audit of the invoices or
vouchers axed statements of cost as shall be deemed necessary. Each payment
theretofore made shall be subject to reduction to the extent of amounts
included in the related invoice or voucher and statement of cost which axe
found by the Contracting Officer on the basis of such audit not to constitute
Allowable Cost, and shall also be subject to reduction for overpayments or to
increase for underpayments on preceding invoices or vouchers. On receipt of
the voucher or invoice designated by the Contractor as the "completion voucher"
or "completion invoice" and statement of cost, which shall be submitted by the
Contractor as promptly as may be practicable following completion of the work
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under this contract but in no event later than one (1) year (or such longer
period as the Contracting Officer may, in his discretion, approve in writing)
from the date of such completion, and following compliance by the Contractor with
all provisions of this contract (including, without limitation, provisions
relating to patents and the provisions of paragraphs (e) and (f) of this clause),
the Government shall as promptly. as may be practicable pay any balance of
Allowable Cost.
(e) The Contractor and each assignee under an assigmnent entered into
under this contract and in effect at the time of final payment under this
contract shall execute and deliver at the time of and as a condition precedent
to final payment under this contract, a release discharging the Government,
its officers, agents and employees of and from all liabilities, obligations,
and claims arising out of or under this contract, subject on],y to the following
exceptions:
(1) Specified claims in stated amounts or in estimated amounts where
the amounts are not susceptible of exact statement by the Contractor.
(2) Claims, together with reasonable expenses incidental thereto, based
upon the liabilities of the Contractor to third parties arising out
of the performance of the contract, which are not known to the
Contractor on the date of the execution of the release, and of which
the Contractor gives notice in writing to the Contracting Officer not
more than six (6) years after the date of the release or the date of
any notice to the Contractor that the Government is prepared to
make Pinal payment, whichever is earlier.
(3) Claims for reimbursement of costs (othex than expenses of the
Contractor by reason of its indemnification of the Government
against patent liability), including reasonable expenses incidental
thereto, incurred by the Contractor under the provisions of the
contract relating to patents.
(f) The Contractor agrees that any refunds, rebates or credits (including
any interest thereon) accruing to or received by the Contractor or su~y
assignee which arise out of the performance of this contract and on account of
which the Contractor has received reimbursement shall be paid by the Contractor
to the Government. The Contractor and each assignee under an assignment
entered into under this contract and in effect at the time of final payment
under this contract shall execute and deliver at the time of and as a condition
precedent to final payment under this contract, an assignment to the Government
of refunds, rebates or credits (including any interest thereon) arising out of
the performance of this contract, in form and substance satisfactory to the
Contracting Officer. Reasonable expenses incurred by the Contractor for the
purpose of securing say such refunds, rebates or credits shall constitute
Allowable Cost when approved by the Contracting Officer.
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(g) Any cost incurred by the Contractor under the terms of this contract
which would constitute Allowable Cost under the provisions of this clause shall
be included in determining the amount payable under this contract, notwithstanding
any provisions contained in the specifications or other documents incorporated
in this contract by reference, designating services to be performed or materials
to be furnished by the Contractor at its expense or without cost to the Government.
(h) Payment of the fixed fee shall be made to the Contractor as provided
in the Schedule subject, however, to the withholding provisions of paragraph (c)
hereof .
ARTICLE 6. RECORDS.
(a) (1) The Contractor agrees to maintain books, records, documents and
other evidence pertaining to the costs and expenses of this contract (hereinafter
collectively called the "records") to-the extent and in such detail as will
properly reflect all net costs, direct and. indirect, of labor, materials,
equipment, supplies and services, and other costs and expenses of whatever nature
for which reimbursement is claimed under the provisions of this contract. The
Contractor's accounting procedures and practices shall be sub3ect to the approval
of the Contracting Officer; provided, however, that no material change will be
required to be made in the Contractor's accounting procedures and practices if
they conform to generally accepted accounting practices and if the costs properly
applicable to this contract are readily ascertainable therefrom.
(2) The Contractor agrees to make available at the office of the Contractor
at all reasonable times during the period set forth in subparagraph (1~) below
any of the records for inspection, audit or reproduction by the Comptroller of
the Contracting Government Agency or his authorized representatives.
(3) In the event the Comptroller of the Contracting Government Agency or
his authorized representatives determines that his audit of the amounts reimbursed
under this contract as transportation charges will be made at a place other
than the office of the Contractor, the Contractor agrees to deliver, with the
reimbursement voucher covering such charges or as may be otherwise specified
within two years after reimbursement of charges covered by any such voucher, to
such representative as may be designated for that purpose through the Contracting
Officer such documentary evidence in support of transportation costs as may be
required by the Comptroller of the Contracting Government Agency or his authorized
representatives.
(4) Except for documentary evidence delivered to the Government pursuant to
subparagraph (3) above, the Contractor shall preserve and make available its
records for a period of six years (unless a longer period of time is provided by
applicable statute) from the date of the voucher or invoice submitted by the
Contractor after the completion of the work under the contract and designated by
the Contractor as the "completion voucher" or "completion invoice" or, in the
event this contract has been completely terminated, from the date of the termina-
tion settlement agreement; provided, however, that records which relate to (A) ap-
peals under the clause of this contract entitled "Disputes," (B) litigation or the
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settlement of claims arising out of the performance of this contract, or
(C) costs or expenses of the contract as to which exception has been taken by
the Comptroller of the Contracting Government Agency or his authorized
representatives, shall be retained by the Contractor until such appeals,
litigation, claims, or exceptions have been. disposed of, but in no event for
less than the six-year period mentioned above.
(5) Except for documentary evidence delivered pursuant to subparagraph (3)
above, and the records described in the proviso of subparagraph (~+) above, the
Contractor may in fulfillment of its obligation to retain its records as
required by this clause substitute photographs, microphotographs or other
authentic reproductions of such records, after the expiration of two years
following the last day of the month of reimbursement to the Contractor of the
.invoice or voucher to which such records relate, unless a shorter period is
authorized by the Contracting Officer with the concurrence of the Comptroller
of the Contracting Government Agency or his authorized representatives.
(6) The provisions of this paragraph (e), including this subparagraph (6),
shall be applicable to and included in each subcontract hereunder which is on
a cost, cost-plus-a-fixed-fee, time-and-material or labor-hour basis.
(b) The Contractor further agrees to include in each of his subcontracts
hereunder, other than those set forth in subparagraph (a) (6) above, a
provision to the effect that the subcontractor agrees that the Comptroller
of the Contracting Government Agency or his authorized representatives, shall,
until the expiration of three years after final payment under the subcontract,
have access to and the right to examine any directly pertinent books, documents,
papers, and records of such subcontractor involving transactions related to the
subcontract. The term "subcontract," as used in this paragraph (b) only,
excludes (i) purchase orders not exceeding $1,000 and (ii) subcontracts or
purchase orders for public utility services at rates established for uniform
applicability to the general public.
ARTICLE 7. GOVERNMENT PROPERTY.
(a) The Government shall deliver to the Contractor the property described
in the Schedule or the Specifications at the times stated therein, or if not
so stated in sufficient time to enable the Contractor to perform this contract.
If any of such property is not delivered to the Contractor by such time or
times, the Contracting Officer, upon written request of the Contractor, shall
equitably ad3ust the time of performance of this contract. In no event shall
the Government be liable to the Contractor for damages or loss of profit by
reason of any delay in or failure to deliver any or all of the items set forth
in the Schedule or Specifications.
(b) Title to all property furnished by the Government shall remain in
the Government. Title to all property purchased by the Contractor, for the
cost of which the Contractor is entitled to be reimbursed as a direct item
of cost under this contract, shall pass to and vest in the Government upon
delivery of such property by the vendor. Title to other property, the cost of
which is reimbursable to the Contractor under this contract, shall pass to and
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vest in the Government upon (i) issuance for use of such property in the
performance of this contract, or (ii) commencement of processing or use of
such property in the performance of this contract, or (iii) reimbursement of
the cost thereof by the Government, whichever first occurs. All the items to
be furnished by the Government, as set forth in the Schedule or Specifications,
together with all property acquired by the Contractor title to which vests in
the Government under this paragraph, are subject to the provisions of this
clause and are hereinafter collectively referred to as "Government Property."
(c) Title to the Government Property shall not be affected by the
incorporation or attachment thereof to any property not ovned by the Government,
nor shall such Goverrmient Property, or any part thereof, be or become a
fixture or lose its identity as personality by reason of affixation to any
realty. The Contractor shall maintain adequate property control records of
the Government Property and shall identify the Government Property as such
in accordance with the provisions of the "Manual for Control of Government
Property in Possession of Contractors" as in effect on the date of this contract,
which is incorporated herein by reference.
(d) The Government Property provided or furnished pursuant to the terms
of this contract shall, unless otheririse provided herein, be used only for
the performance of this contract.
(e) The Contractor shall maintain and administer in accordance with sound
industrial practice, a program for the maintenance, repair, protection and
preservation of Government Property so as to assure its full availability
and usefulness for the performance of this contract. The Contractor shall take
ell reasonable steps to comply with all appropriate directions or instructions
which the Contracting Officer may prescribe as reasonably necessary for the
protection of Government Property.
(f) (i) The Contractor shall not be liable for any loss of or damage
to the Government Property, or for expenses incidental to such loss or
damage, except that the Contractor shall be responsible for arty such loss or
damage (including expenses incidental thereto) (A) which results from
willful misconduct or lack of good faith on the part of anq of the Contractor's
directors or officers, or on the part of any of .its managers, superintendents,
or other equivalent representatives, who has supervision or direction of
(I) all or substantially s11 of the Contractor's business, or (II) all or
substantially all of the Contractor's operations at any one plant or separate
location in which this contract is being performed, or (III) a separate and
complete mayor industrial operation in connection with the performance of this
contract; or (B) which results from a failure on the part of the Contractor,
due to the willful. misconduct or lack of good faith on the part of any of its
directors. officers, or other representatives mentioned in subparagraph (A)
above, (I~ to maintain and administer, in accordance with sound industrial
practice, the program for maintenance, repair, protection and preservation of
Government Property as required by paragraph (e) hereof, or (II) to take all
reasonable steps to ca~mply with any appropriate written directions of the
Contracting Officer under paragraph (e) hereof; or (C) for which the Contractor
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'tea',,";
is otherwise responsible under the express terms of clause(s)
of this contract, or of the clause or clauses designated in the Schedule;
or (D) which results from a risk expressly required to be insured under this
contract, but only to the extent of the insurance so required to be procured
and maintained, or to the extent of insurance actually procured and
maintained, whichever is greater; or (E) which results .from a risk which is
in fact covered by insurance or for which the Contractor is otherwise
reimbursed, but only to the extent of such insurance or reimbursement;
provided that, if more than one of the above exceptions shall be applicable
in any case, the Contractor's liability under any one exception shall not be
limited by any other exception. This clause shall not be construed as
relieving a subcontractor from liability for loss or destruction of or damage
to Government Property in its possession or control, except to the extent that
the subcontract, with the prior approval of the Contracting Officer, may provide
for the relief of the subcontractor from such liability. In the absence of such
approval, the subcontract shall contain appropriate provisions requiring the
return of all Government Property in as good condition as when received,
except for reasonable wear and tear or for the utilization of the property in
accordance with the provisions of the prime contract.
(ii) The Contractor shall not be reimbursed for, and shall not
include as axi item of overhead, the cost of insurance, or any provision
for a reserve, covering the risk of loss of or damage to the Government
Property, except to the extent that the Government may have required the
Contractor to carry such insurance under any other provision of this contract.
(iii) Upon the happening of loss or destruction of or damage to
the Government Property, the Contractor shall notify the Contracting Officer
thereof,. and shall communicate with the Loss and Salvage Organization, iS any,
now or hereafter designated by the Contracting Officer, and with the assistance
of the Loss and Salvage Organization so designated (unless the Contracting
Officer has designated that no such organization be employed), shall take all
reasonable steps to protect the Government Property from further damage,
separate the damaged and undamaged Government Property, put all the Government
Property in the best possible order, and furnish to the Contracting Officer a
statement of (A) the lost, destroyed and damaged Government Property, (B) the time
and origin of the loss, destruction or damage, (C) all known interests in
commingled property of which the Government Property is a part, and (D) the
insurance, if any, covering any part of or interest in such commingled property.
The Contractor shall make repairs and renovations of the damaged Government
Property or take such other action as the Contracting Officer directs.
(iv) In the event the Contractor is indemnified, reimbursed, or
otherwise compensated for any loss or destruction of or damage to the Government
Property, it shall use the proceeds to repair, renovate or replace the
Government Property involved, or shall credit such proceeds against the cost
of the work covered by the contract, or shall otherwise reimburse the Government,
as directed by the Contracting Officer. The Contractor shall do nothing to
pre3udice the Government's right to recover against third parties for any such
loss, destruction or damage and, upon the request of the Contracting Officer,
shall, at the Government's expense, furnish to the Government all reasonable
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assistance and cooperation (including the prosecution of suit and the execution
of instruments of assignment in favor of the Government) in obtaining recovery.
In addition, where the subcontractor has not been relieved from liability for
any loss or destruction of or damage to Government Property, the Contractor
shall enforce the liability of the subcontractor for such loss or destruction of
or damage to the Government Property for the benefit of the Goveramdent.
(g) The Government shall at all reasonable times have access to the
premises where any of the Government Property is located.
(h) The Government Property shall remain in the possession of the
Contractor for such period of time as is required for the performance of this
contract unless the Contracting Officer determines that the interests of the
Government require removal of such property. In such case the Contractor shall
promptly take such action as the Contracting Officer may direct with respect to
the removal and shipping of Government Property. In nny such instance, the
contract may be amended to accomplish an equitable adjustment in the terms and
provisions thereof.
(i) Upon the completion of this contract, or at such earlier date as
may be fixed by the Contracting Officer, the Contractor shall submit to the
Contracting Officer in a form acceptable to him inventory schedules covering
all items of the Government Property not consumed in the performance of this
contract (including ax~y resulting scrap), or not theretofore delivered to the
Government, and shall deliver or make such other disposal of the Government
Property as may be directed by the Contracting Officer. Recoverable scrap shall
be reported in accordance with a procedure and in such form as the Contracting
Officer may direct. The net proceeds of any such disposal approved by the Con-
tracting Off icer shall be credited to the cost of the work covered by the
contract or shall be paid in such manner as the Contracting Officer may direct.
(j) Unless otherwise provided herein, the Government shall not be
under any duty or obligation to restore or rehabilitate, or to pay the costs
of the restoration or rehabilitation of the Contractor's plant or any portion
thereof which is affected by the removal of ar~y Government Property.
(k) Directions of the Contracting Officer and communications of the
Contractor issued pursuant to this clause shall be in writing.
ARTICLE 8. INSURANCE-LIABILITY TO THIRD PERSONS.
(a) The Contractor shall procure and thereafter maintain workmen's
compensation, employer's liability, comprehensive general liability (bodily
injury) and comprehensive automobile liability (bodily injury and property
damage) insurance, with respect to performance under this contract, and such
other insurance as the Contracting Officer may from time to time require with
respect to performance under this contract; provided, that the Co~ractor in
fulfillment of its obligation to procure workmen's compensation insurance may,
with the approval of the Contracting Officer and pursuant to statutory authority,
maintain a self-insurance program. All insurance required pursuant to the
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provisions of this paragraph shall be in such form, in such amounts, and for
such periods of time, as the Contracting Officer may from time to time
require or approve, and with insurers approved by the Contracting Officer.
(b) The Contractor agrees, to the extent and in the manner required by
the Contracting Officer, to submit for the approval of the Contracting Officer
any other insurance maintained by the Contractor in connection with the
performance of this contract and for which the Contractor seeks reimbursement
hereunder.
(c) The Contractor shall be reimbursed: (i) for the portion allocable
to this contract of the reasonable cost of .insurance as required or approved
pursuant to the provisions of this clause, and (ii) for liabilities to third
persons for loss of or damage to :property (other than property (A) awed,
occupied or used by the Contractor or rented to the Contractor or (B) in the
care, custody, or control of the Contractor), or for death or bodily injury,
not compensated by insurance or otherwise, arising out of the performance of
this contract, whether or not caused by the negligence of the Contractor, its
agents, servants or employees, provided such liabilities are represented by
final judgments or by settlements approved in writing by the Government, and
expenses incidental to such liabilities, except liabilities (I) for which the
Contractor is otherwise responsible under the express terms of the clause or
clauses, if any, specified in the Schedule, or (II) with respect to which the
Contractor has failed to insure as required or maintain insurance as approved
by the Contracting Officer or (III) which results from willful misconduct or
lack of good faith on the part of any of the Contractor's directors or officers,
or on the part of any of its managers, superintendents, or other equivalent
representatives, who has supervision or direction of (1) all or substantially
all of the Contractor's business, or (2) e1.1 or substantially s11 of the
Contractor's operations at .any one plant or separate location in which this
contract is being performed, or (3) a separate and complete ma,~or industrial
operation in connection with the performance of this contract. The foregoing
shall not restrict the right of the Contractor to be reimbursed for the cost
of insurance maintained by the Contractor in connection with the performance
of this contract, other than insurance required to be submitted for approval or
required to be procured and maintained pursuant to the provisions of this clause,
provided such cost would constitute Allowable Cost under the clause of this
contract entitled "Allowable Cost, Fixed Fee and Payment."
(d) The Contractor shall give the Government or its representatives
immediate notice of any suit or action filed, or prompt notice of any claim
made, against the Contractor arising out of the performance of this contract,
the cost and expense of which may be reimbursable to the Contractor under the
provisions of this contract, and the risk of which is then uninsured or in which
the amount claimed exceeds the amount of coverage. The Contractor shall
furnish immediately to the Government copies of all pertinent papers received
by the Contractor. If the amount of the liability claimed exceeds the amount of
coverage, the Contractor shall authorize representatives of the Government to
collaborate with counsel for the insurance carrier, if any, in settling or
defending such claim. If the liability is not insured or covered by bond, the
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Contractor shall, if required by the Government, authorize representatives of
the Government to settle or defend any such claim and to represent the Con-
tractor in or take charge of any litigation in connection therewith: Provided,
however, That the Contractor may, at its own expense, be associated with the
representatives of the Goverrmient in the settlement or .defense of any such claim
or litigation. ,
ARTICLE 9. INSPECTION AND CORRECTION OF DBFBCTS.
(a) All work under this contract shall be sub,~ect to inspection and test
by the Government, to the extent practicable at all reasonable times and places
including the period of performance, and in any event prior to final acceptance.
The Contractor shall provide and maintain an inspection system acceptable to the
Government covering the work hereunder. The Government, through any authorized
representative, may inspect the plant or plants of the Contractor or of any of
its subcontractors engaged in the performance of this contract. If any inspection
or test is made by the Government on the premise of the Contractor or a sub-
contractor, the Contractor shall provide and shall require subcontractors to
provide all reasonable facilities and assistance for the safety and convenience
of the Government inspectors in the performance of their duties. All inspections
and tests by the Government shall be performed in such a manner as will not unduly
delay the work. Final inspection and acceptance by the Government shall be made
as promptly as practicable after delivery. The time and place of delivery,
final inspection, and acceptance shall be as set forth in the schedule.
(b) The Contractor warrants that the services rendered in the performance
of this contract will conform to the requirements of this contract and to high
professional standards in the field, and-that any article delivered to the
Government under this contract will conform to the requirements of this contract
and will not be defective in material or workmanship.
(c) At any time during performance of this contract, but not later than
six (6) months (or such other period ss may be provided in the schedule) after
final acceptance, the Government may require the Contractor to remedy by
correction or replacement as directed. by the Contracting Officer, .any failure
by the contractor to comply with its obligations under paragraph (b) hereof.
Except as otherwise provided in paragraph (d) hereof, the cost of nay such
replacement or correction shall be included in "Allowable Cost" determined as
provided in the clause of this contract entitled "Allowable Cost, Fixed Fee
and Payment," but no additional fee shall be payable with respect thereto.
Corrected articles shall not be tendered again for acceptance unless the
former tender and the requirements of correction is disclosed. If the
contractor fails to proceed with reasonable promptness to perform such re-
placement or correction, the Government (i) may by contract or otherwise
perform such replacement or correction and charge to the Contractor any
increased cost occasioned the Government thereby, or may reduce any fixed
fee payable under this contract (or require repayment of any fixed fee
theretofore paid) in such amount as may be equitable under the circumstances;
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or (ii) in the ease ~._ articles not delivered, may re4_lre the delivery of
such articles, and shall have the right to reduce any fixed fee payable
under this contract (or to require repayment of any fixed fee theretofore
paid) in such amount as may be equitable under the circumstances; or (iii)
may terminate this conrtract for default as provided in the clause of this
contract entitled "Termination." Failure to agree on the amount of any
such increased cost to be charged to the Contractor or to such reduction
in, or repayment of, the fixed fee shall be a dispute concerning a
question of fact within the meaning of the clause of this contract entitled
"Disputes."
(d) Notwithstanding the provisions of paragraph (c) hereof, the
Government may at any time require the contractor to remedy by correction
or replacement, without cost to the Government, any failure by the
Contractor to comply with its obligations under paragraph (b) hereof, if
such failure is due to fraud, lack of good faith, or willful misconduct
on the part of any of the contractor's directors or officers, or on the
part of its managers, superintendents, or other equivalent representatives,
who has supervision or direction of (i) all or substax~ sally all of the
Contractor's business; or (ii) all or substantially all of the Contractor's
operations at any one plant or separate location in which this contract
is being performed; or (iii) a separate and complete mayor industrial
operation in connection with the performance on this contract. Fraud,
lack of good faith, or willful. misconduct on the part of any of such
supervisory personnel shall be deemed to include the selection of
individual employees or the retention of employees after any of such
supervisory personnel has reason to believe that such employees are
habitually careless or otherwise unqualified.
(e) Corrected articles tendered as replacements shall be subject to
the provisions of this clause in the same manner and to the same extent as
supplies originally delivered under this contract.
(f) The contractor shall make its records of all inspection work
available to the Government during the performance of this contract and
for such longer period as may be specified in this contract.
(g) Except as otherwise provided in the schedule, the contractor's
obligation to correct or replace Government-furnished property (which is
property in the possession of or acquired directly by the Government and
delivered yr otherwise made available to the contractor) shall be governed
by the provisions of the clause of this contract entitled "Government
Property."
ARTICLE 10. SUBCONTRACTS.
(a) The Contractor shall give advance notification to the Contracting
Officer of any proposed subcontract hereunder which (i) is on a cost or
cost-plus-a-fixed-fee basis, or (ii) is on s fixed-price basis exceeding in
dollar amount either $25,000 or five percent (5~) of the total estimated
cost of this contract.
(b) The Contractor shall not, without the prior written consent of
the Contracting Officer, place any subcontract which (i) is on a cost or
cost-plus-a-fixed-fee basis, or (ii) is on a fixed-price basis exceeding in
dollar amount either $25,000 or five percent (596) of the total estimated
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cost of this contract, or (iii) provides for the fabrication, purchase,
rental, installation or other acquisition, of any item of industrial
facilities, or of special tooling having a value in excess of $1,000,
or (iv) is on atime-and-materi8l or labor-hour basis, or (v) involves
research and development work. The Contracting Officer may, in his
discretion, ratify in writing any such subcontract; such action shall
constitute the consent of the Contracting Officer as required by this
paragraph (b).
(c) The Contractor agrees that no subcontract placed under this
contract shall provide for payment on a cost-plus-a-percentage-of-coat
basis.
(d) The Contracting Officer may, in his discretion, specifically approve
in writing any of the provisions of a subcontract. However, such approval
or the consent of the Contracting Officer obtained as required by this
cause shall not be construed to constitute a determination of the allaw-
ability of any cost under this contract, unless such approval specifically
provides that it constitutes a determination of the allowability of such
cost.
(e) The Contractor shall give the Contracting Officer immediate notice
in writing of any action or suit filed, and prompt notice of any claim made
against the Contractor by any subcontractor or vendor which, in the opinion
of the Contractor, may result in litigation, related in any way to this
contract with respect to which the Contractor may be entitled to reimburse-
ment from the Government.
ARTICLE 11. NOTICE AND ASSISTANCE REGARDING PATPNT INFRINGE~NT.
The provisions of this clause shall be applicable only if the amount of
this contract is in excess of $5,000.
(a) The Contractor shall report to the Contracting Officer, promptly
and in reasonable written detail, each notice or claim of patent infringe-
ment based on the performance of this contract of which the Contractor has
knowledge.
(b) In the event of litigation against the Government on account of any
claim of patent infringement arising out of the performance of this con-
tract or out of the use of any supplies furnished or work or services per-
formed hereunder, the Contractor shall furnish to the Goverrunent, upon
request, all evidence and information in possession of the Contractor per-
taining to such litigation. Such evidence and information shall lie fur-
nished at the expense of the Government except in those cases in which
the Contractor has agreed to indemnify the Government against the claim
being asserted.
sir
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..,n
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ARTICLE 12. FILING OF PATENT APPLICATIONS.
(a) Before filing or causing to be filed a patent application disclosing
any subject matter of this contract, which subject matter is classified
"Secret" or higher, the Contractor shall, citing the thirty (30) day pro-
vision below, transmit the proposed application to the Contracting Officer
for determination whether, for reasons of national security, such applica-
tion should be placed under an order of secrecy or sealed in accordance
with the provisions of 35 U. S. Code 181-188 or the issuance of a patent
should be otherwise delayed under pertinent statutes or regulations; and
the Contractor shall observe any instructions of the Contracting Officer
with respect to the manner of delivery of the patent application to the
U. S. Patent Office for filing, but the Contractor shall not be denied the
right to file such patent application. If the Contracting Officer ahnll
not have given any such instructions within thirty (30) days from the date
of mailing or other transmittal of the proposed application, the Contractor
may file the application.
(b) The Contractor shall furnish to the Contracting Officer, at the
time of or prior to the time when the Contractor files or causes to be filed
a patent application disclosing any subject matter of this contract, which
subject matter is classified "Confidential", a copy of such application for
determination whether, for reasons of national security, such application
should be placed under an order of secrecy or the issuance of a patent
should be otherwise delayed under pertinent statutes or regulations.
(c) In filing any patent application coming within the scope of this
clause, the Contractor shall observe all applicable security regulations
covering the transmission of classified subject matter.
ARTICLE 13. PATENT RIGHTS.
(a) As used in this clause, the following terms shall have the meanings
set forth below:
(i) The term "Subject Invention" means any invention, improvement
or discovery (whether or not patentable) conceived or first actually re-
duced to practice either (A) in the performance of the experimental,
developmental, or research work called for or required under this contract,
or (B) in the performance of any experimental, developmental, or research
work relating to the subject matter of this contract which was done upon
an understanding in writing that a contract would be awarded; provided
that the term "Subject Invention" shall not include any invention which
is specifically identified and listed in the Schedule for the purpose of
excluding it from the license granted by this clause.
(ii) The term "Technical Personnel" means any person employed by or
working under contract with the Contractor (other than a subcontractor
whose responsibilities with respect to rights accruing to the Government
in inventions arising under subcontracts are set forth in paragraphs (g),
(h), and (i) of this clause) who, by reason of the nature of his duties in
connection with the performance of this contract, would reasonably be
expected to make inventions.
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(iii) The terms "subcontract" and "subcontractor" mean any subcon-
tract or subcontractor of the Contractor, and any lower-tier subcontract
or subcontractor under this contract.
(b) The Contractor agrees to and does hereby grant to the Government
an irrevocable, nonexclusive, nontransferable, and royalty-free license
to practice, and cause to be practiced by or for the United States Govern-
ment throughout the world, each 5ub~ect Invention in the manufacture,
use and disposition according to law, of any article or material, and in
the use of any method; provided, however, that with respect to (i) any
Subject Invention made by other than Technical Personnel, (ii) any Sub-
,ject Invention conceived prior to, but first actually reduced to practice
in the course of, any of the experimental, developmental, or research work
specified in paragraph (a)(i) above, and (iii) the practice of any Subject
Invention in foreign countries, the obligation of the Contractor to grant
the aforesaid license and the other rights hereinafter provided in this
clause shall be limited to the extent of the Contractor's right to grant the
same without incurring any obligation to pay royalties or other compen-
sation to others solely on account of said grant. No license granted herein
shall convey any right to the Government to manufacture, have manu-
factured, or use any Subject Invention for the purpose of providing
services or supplies to the general public in competition with the Con-
tractor or the Contractor's commercial licensees in the licensed fields.
Nothing contained in this paragraph shall be deemed to great any license
under say invention other than a Subject Invention.
(c) The Contractor shall:
(i) Make a written disclosure to the Contracting Officer promptly after
conception or first actual reduction to practice of each Subject Invention
which reasonably appears to be patentable;
(ii) Certify to the Contracting Officer not less often than every twelve
months, commencing with the date of this contract, whether or not any
Subject Inventions were conceived or first actually reduced to practice
during the preceding twelve months; and
(iii) Prior to final settlement of this contract, make a summary report
of all those Subject Inventions previously disclosed and of those Subject
Inventions conceived or first actually reduced to practice after the last
certification but prior to the summary report.
(d) The Contractor shall also, in connection with each Subject Inven-
tion referred to in paragraph (c)(i) above;
(i) Specify, at the time of making written disclosure, whether or not a
United States Patent application claiming such Invention has been or will
be filed by or on behalf of the Contractor. If the Contractor specifies that
a United States patent application will be filed claiming such Invention,
the Contractor shall file or cause to be filed such application in due form
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and time. If the Contractor decides not to file or cause to be filed said
application after having specified that it would file, the Contractor shall
so notify the Contracting Officer at the earliest practicable date and in auy
event not later than eight months- after first publication, public use or sale;
(ii) In the event the Contractor specifies that it has not filed and will
not file (or having specified that it will file, thereafter notifies the Con-
tracting Officer to the contrary), (A) inform the Contracting Officer in
writing at the earliest practicable date of any publication of such Inven-
tion made by or known to the Contractor or, where applicable, of any con-
templated publication by the Contractor, stating the date and identity of
such publication or contemplated publication, and (B) convey to the Gov-
ernment the Contractor's entire right, title and interest in such Invention
by delivering to the Contracting Officer upon written request such duly
executed instruments (prepared by the Government) of assigzm-ent, ap-
plication and other papers as are deemed necessary to vest in the Govern-
ment the Contractor's right, title and interest aforesaid, and the right to
apply for and prosecute patent applications covering such Invention
throughout the world, sub~eet, however, to the right reserved to the Con-
tractor in paragraph ~e) to file foreign applications, and subject further
to the reservation of a nonexclusive and royalty-free license to the Con-
tractor (and to its existing and future associated and affiliated companies,
if any, within the corporate structure of which the Contractor is apart)
which license shall be assignable to the successor of that part of the Con-
tractor's business to which the Subject Invention pertains;
(iii) Furnish promptly to the Contracting Officer on request an irrevo-
cable power of attorney to inspect and make copies of each United States
patent application filed by or on behalf of the Contractor covering any
Subject Invention;
(iv) In the event the Contractor, or those deriving rights from the
Contractor, elects not to continue prosecution of any such United States
patent application filed by or on behalf of the Contractor, so notify the
Contracting Officer not less than sixty days before the expiration of the
response period and, upon written request, deliver to the Contracting Offi-
cer such duly executed instruments (prepared by the Government) as are
deemed necessary to vest in the Government the Contractor's entire right,
title and interest in the Subject Invention and the application, subject to
the reservations as specified in (ii) above; and
(v) Deliver to the Contracting Officer duly executed instruments fully
confirmatory of any license rights herein agreed to be granted to the Gov-
ernment.
(e) The Contractor, or those deriving rights from the Contractor, has
the option of filing patent applications in foreign countries on Subject
Inventions. If this option is not exercised in the time and manner set
forth below, the Government shall have the right to file applications in
each foreign country in which the Contractor has not exercised its option.
(i) In the event that the Contractor specifies under the provisions of
paragraph (d) that it has not filed and will not file a United States patent
application (or having specified that it will file, thereafter notifies
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the Contracting Officer to the contrary) the Contractor shall have six
months from the date of making the written disclosure required by para-
graph (c)(i) to file foreign patent applications.
(ii) In the event that a United States patent application is filed by
or on behalf of the Contractor under the provisions of paragraph (d),
the Contractor shall have six months from the date of the United States
application, or six months from the date permission is granted to file
foreign applications where such filing had been prohibited for security
reasons, within which to file foreign patent applications. With respect
to each Subject Invention on which it has specified that a United States
patent application has been or will be filed by or on behalf of the Con-
tractor, the Contractor shall (A) inform the Contracting Officer in writing
of each foreign patent application for such Invention filed by or on behalf
of the Contractor within six months after the filing by the Contractor of
the corresponding United States application, and, if practicable, prior
to the publication of the Subject Invention in an~}r country, (B) inform
the Contracting Officer in writing at the earliest practicable date of at~y
publication of the Sub3ect Invention made by or known to the Contractor
or, where applicable, of any contemplated publication by the Contractor,
stating the date and identity of such publication or contemplated publica-
tion, (C) upon written request of the Contracting Officer, convey to the
Government the Contractor's entire right, title, and interest in such
Invention in those countries in which the Contractor has not, within six
months after the filing of the corresponding United States application,
filed foreign patent applications, and deliver to the Contracting Officer,
upon written request, such duly executed instruments (prepared by the
Government) of assignment, application, and other papers as are deemed
necessary to vest in the Government the Contractor's right, title, and
interest as aforesaid and the right to apply for and maintain patents
covering such invention, sub,~ect, however, to the reservation of a non-
exclusive and royalty-free license to the Contractor (and to its existing
and future associated and affiliated companies, if any, within the corpo-
rate structure of which the Contractor is a part) which license shall be
assignable to the successor of that part of the Contractor's business to
which the Subject Invention pertains, and (D) in the event that the
Contractor, or those deriving rights from the Contractor, elects not to
continue the prosecution of any foreign application which has been filed
by or on behalf of the Contractor, or elects not to maintain any patent
granted on such application, so notify the Contracting Officer not less
than ninety days before the expiration of the response period or patent
lapse date and, upon written request, deliver to the Contracting Officer
such duly executed instruments (prepared by the Government) as will
convey to the Government the Contractor's entire right, title, and interest
in the application or patent, subject to a reservation as specified in (C)
above .
(f) If the Contractor fails to deliver to the Contracting Officer the
certificates required by paragraph (c)(ii) of this clause or fails to furnish
the written disclosures for all Sub3ect Inventions required by paragraph
(c)(i) of this clause shown to be due in accordance with airy certificate
delivered under paragraph (c)(ii), there shall be withheld from payment
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until the Contractor shall have corrected such failures either (i) ten percent
(10~-) of the amount of this contract, as from time to time amended, or
(ii) $5,000, whichever is less. After payment of eighty percent (8091,) of the
amount of this contract, es from time to time amended, payment shall be
withheld until a reserve of either (i.) ten percent (1096) of such amount, or
(ii) $5,000, whichever amount is less, shall have been set aside, such reserve
or balance thereof to be retained until the Contractor shall have furnished to
the Contracting Officer (A) the sua~nary report required by paragraph (c)(iii)
of this clause, (B) written disclosures for all Subject Inventions required by
paragraph (c)(i) of this clause which axe shown to be due in accordance with
certificates delivered under paragraph (e)(ii) or in accordance with such aumraary
report, and (C) the information as to any subcontractor required by
paragraph (h) of this clause. The maximum amount which may be withheld under
this paragraph shall not exceed ten percent (1096) of the amount of this contract
or $5,000, whichever is less, and no amount shall be withheld under this
paragraph when the minimum amount specified by this paragraph is being withheld
under other provisions of this contract. The withholding of aury amount or
subsequent payment thereof to the Contractor shall not be construed as a waiver
of any rights accruing to the Government under this contract. This paragraph
shall not be construed as requiring the Contractor to withhold any amounts from
a subcontractor to enforce complisaee with the patent provisions of a subcontract.
(g) The Contractor shall exert all reasonable effort to negotiate for the
inclusion of this Patent. Rights clause in at~y'subcontract hereunder of $3,000 or
more having experimental, developmental, or research work as one of its purposes.
In the event of refusal by a subcontractor to accept the Patent Rights clause,
the Contractor shall not proceed with the subcontract without written authorization
of the Contracting Officer, and upon obtaining such authorization, shall cooperate
with the Government in the negotiation with such subcontractor of an acceptable
patent rights clause; provided, ho~tever, that the Contractor shall in any
event require the subcontractor to grant to the Goverxmient patent rights under
Sub3ect Inventions of no less scope and on no leas favorable terms than those
which the Contractor has under such subcontract, except that is no event shall
the subcontractor be required to great to the Government patent rights in excess
of those herein agreed to be granted to the Government by the Contractor.
(h) The Contractor shall, at the earliest practicable date, notify the
Contracting Officer in writing of any subcontract containing a patent rights
clause, furnish the Contracting Officer a copy of such clause, sad notify
the Contracting Officer when such subcontract is completed. It is understood
that with respect to such subcontract clause, the Government is a third party
beneficiary; and the Contractor hereby assigns to the Government all the rights
that the Contractor would have to enforce the subcontractor's obligations for the
benefit of the Government with respect to Subject Inventions. The Contractor
shall not be obligated to enforce the agreements of any subcontractor hereunder
relating to Subject Inventions.
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(i) When the Contractor shows that it has been delayed in the performance
of this contract by reason of its inability to obtain in accordance with
paragraph (g) a suitable patent rights clause from a qualified subcontractor
for any item or service required under this contract for which the Contractor itself
does not have available facilities or qualified personnel, the Contractor's
delivery dates shall be extended for a period of time equal to the duration of
such delay; and, upon request of the Contractor, the Contracting Officer shall
determine to what extent, if any, an additional extension of the delivery dates
and an increase in contract prices based upon additional costs incurred by such
delay are proper under the circumstances; and the contract shall be modified
accordingly. If the Contractor, after exerting all reasonable effort, is
unable to obtain a qualified subcontractor as set forth above, the Contractor
may submit to the Contracting Officer a written request for waiver or modification
of the requirement that a suitable patent rights clause be included in the
subcontract. Such request shall specifically state that the Contractor has
used e11 reasonable effort to obtain such qualified subcontractor, and shall
cite the waiver or termination provision hereinafter set forth.' If, within
thirty-five (35) days after the date of receipt of such request for a waiver or
modification of said requirement, the Contracting Officer shall fail to deny
in writing such request, the requirement shall be deemed to have been waived by
the Government. If within such period the Contractor shall receive a written
denial of such request by the Contracting Officer, this contract shall thereupon
automatically terminate and the rights and obligations of the parties shall
be governed by the provisions of the clause of this contract entitled "Termination
for the Convenience of the Government."
ARTICLE 14. AUTHORIZATION AND CONSENT.
The Government hereby gives its authorization and consent for all use
and manufacture of any patented invention in the performance of this contract
or any part hereof or any amendment hereto or a~ subcontract hereunder
(including any lower-tier subcontract).
ARTICLE 15. COPYRIGHT.
(a) The Contractor agrees to and does hereby grant to the Government,
and to its officers agents and employees acting within the scope of their
official duties, (i~ a royalty-free, nonexclusive and irrevocable license to
reproduce, translate, publish, use, and dispose of, and to authorize others
so to do, all copyrightable material first produced or composed and delivered
to the Government under this contract by the Contractor, its employees or
any individual or concern specifically employed or assigned to originate and
prepare such material; and (ii) a license as aforesaid under any and all
copyrighted or copyrightable work not first produced or composed by the
Contractor in the performance of this contract but which is incorporated in the
material furnished under the contract, provided that such license shall be
only to the extent the Contractor now has, or prior to completion or final
settlement of the contract may acquire, the right to grant such license without
becoming liable to pay compensation to others solely because of such grant.
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(b) The Contractor agrees that it will exert all reasonable effort to
advise the Contracting Officer, at the time of delivering any copyrightable
or copyrighted work furnished under this contract, of any adversely held
copyrighted or copyrightable material incorporated in any such work and
of any invasion of the right of privacy therein contained.
(c) The Contractor agrees to report to the Contracting Officer,
promptly and in reasonable written detail, any notice or claim of copyright
infringement received by the Contractor with respect to any material delivered
under this contract.
ARTICLE 16. .REPRODUCTION: AND USE OF TECffiJICAL DATA.
The Contractor agrees to and does hereby grant to the Government, to
the full extent of the Contractor's right to do so without payment of compensa-
tion to others, the right to reproduce, use, and disclose for governmental
purposes (including the right to give to foreign governments for their use
as the national interest of the United States may demand) all or any part of
the reports, drawings, blueprints, data, and technical information specified to
be delivered by the Contractor to the Government under this contract; provided,
however, that nothing contained in this paragraph shall be deemed, directly or
by implication, to grant any license under any patent now or hereafter issued
or to grant any right to reproduce anything else called for by this contract.
ARTICLE 17. REPORTING OF ROYALTIES.
If this contract is in an amount which exceeds $10,000, the Contractor
agrees to report in writing to the Contracting Officer, during the performance
of this contract and prior to its completion or final settlement, the amount of
any royalties or royalty rates paid or to be paid by it directly to others in
connection with the performance of this contract, together with the names and
addresses of licensors to whom such payments are made and either the patent
numbers involved or such other information as will permit identification of the
patents or other basis on which royalties are to be paid. Where the Contractor's
compliance With the foregoing reporting requirement is found by the Contracting
Officer to be impracticable because of the size of the Contractor's business or
because of the nature of its accounting procedures, the Contractor may furnish
one or more reports, based on its established accounting periods and covering
the entire contract period, of royalties in excess of $1,000 (if computed on
an annual basis) paid or to be paid to each licensor on the Contractor's over-
all business, together with such other information as will permit identifica-
tion of the patents or other basis on which royalties are to be paid, in which
event the Contractor shall furnish the Contracting Officer, upon his request
and at Government expense, an allocation of such royalty payments to Govern-
ment business or to the work or supplies covered by this contract; reference
to any such periodic royalty reports, previously furnished to any Government
agency and covering the period of performance of this contract, shall constitute
compliance with the reporting requirement of this clause.
fi'
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ARTICLE 18. SECURITY.
(a) Disclosure of Information. It is understood that disclosure of
information relating to the work contracted for hereunder, to any person not
entitled to receive it, or failure to safeguard all secret, confidential, and
restricted matter that may come to the Contractor or any person under his con-
trol in connection with the work under this contract, may subject the Con-
tractor, his agents, employees and subcontractors to criminal liab ility under
the laws of the United States (Act of 25 June 1948, c.645, 62 Stat. 862 as
amended). The provisions of the "Security Requirements for Contractors" and
of the "Contractor's Security Agreement," copies of which have been furnished
to the Contractor, are incorporated herein by reference.
(b) Subcontractors. The Contractor shall cause s like provision to be
inserted in all subcontracts under this contract where consistent with security.
In case of doubt, the Contractor shall seek, sad be guided by, the advice of
the Contracting Officer.
ARTICLE 19 .: DISPUTES.
Except as otherwise provided in this contract, any dispute concerning a
question of fact arising under this contract which is not disposed of by agree-
ment shall be decided by the Contracting Officer, who shall reduce his decision
to writing and mail or otherwise furnish a copy thereof to the Contractor.
Within 30 days from the date of receipt of such copy, the Contractor may appeal
by maill.ng or otherwise furnishing to the Contracting Off icer a written appeal
addressed to the Director, and the decision of the Director or his duly authorized
representative for the hearing of such appeals shall be final and conclusive;
provided that, if no such appeal is taken, the decision of the Contracting
Off icer shall be final and conclusive. In connection with any appeal proceeding
under this clause, the Contractor shall be afforded an opportunity to be heard
and to offer evidence in support of its appeal. Pending final decision of a
dispute hereunder, the Contractor shall proceed diligently with the performance
of the contract and in accordance with the Contracting Officer's decision.
ARTICLE 20. BUY AMERICAN ACT.
The Contractor agrees that there will be delivered under this contract
only such unmanufactured articles, materials and supplies (which term "articles
materials and supplies" is hereinafter referred to in this clause as "supplies"~
as have been mined or produced in the United States, and only such manufactured
supplies as have been manufactured in the United States substantially all from
supplies mined, produced, or manufactured, as the ease may be, in the United
States. Pursuant to the Buy American Act (~+1 U. S. Code l0a-d), the foregoing
provision shall not apply (i) with respect to supplies excepted by the Director
from the application of that Act, (ii) with respect to supplies for use outside
the United States, or (iii) with respect to the supplies to be delivered under
this contract which are of a class or kind determined by the Director or his
duly authorized representative not to be mined, produced, or manufactured, as
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the case may be, in the United States in sufficient and reasonably available
commercial quantities snd of a satisfactory quality, or (iv) with respect to
such supplies, from which the supplies to be delivered under this Contract
are manufactured, as are of a class or kind determined by the Director or hie
duly authorized representative not to be mined, produced, or manufactured,
as the case may be, in the United States in sufficient and reasonably available
commercial quantities and of a satisfactory quality: Provided, That this
exception (iv) shall not permit delivery of supplies manufactured outside the
United States if such supplies are manufactured in the United States in
sufficient and reasonably available caamtercial quantities and of a satisfactory
quality.
ARTICLE 21. OFFICIALS NOT TO BENEFIT.
No member of or delegate to Congress, or resident commissioner, shall
be admitted to any share or part of this contract, or to any benefit that may
arise therefrom; but this provision shall not be construed to extend to this
contract if made with a corporation for its general benefit.
ARTICLE 22. COVENANT AGAINST CONTINGENP FEES.
The Contractor warrants that no person or selling agency has been
employed or retained to solicit or secure this contract upon an agreement or
understanding for a commission, percentage, brokerage, or contingent Yee,
excepting bona fide employees or bona fide established commercial or selling
agencies maintained by the Contractor Yor the purpose of securing business.
For breach or violation of this warranty the Government shall have the right
to annul this contract without liability or in its discretion to deduct Pram
the contract price or consideration the full amount of such commission,
percentage, brokerage or contingent fee.
ARTICLE 23. CONVICT LABOR.
In connection with the performance of work under this contract, the
Contractor agrees not to employ any person undergoing sentence of imprisonment
at hard labor.
ARTICLE 24. EIGHT-HOUR LAW OF 1912.
This contract, to the extent that it is of a character specified in the
Eight-Hour Law of 1912 as amended (40 U. S. Code 324-326) and is not covered by
the Walsh-Healey Public Contracts Act (41 U. S. Code 35-~+~5), is subject to the
following provisions and exceptions of said Eight-Hour Law of 1912 as amended,
and to s11 other provisions and exceptions of said Law:
No laborer or mechanic doing any part of the work contemplated by this
contract, in the employ of the Contractor or any subcontractor contracting for
any part of the said work, shall be required or permitted to work more than
eight hours in any one calendar day upon such work, except upon the condition
that compensation is paid to such laborer or mechanic in accordance with the
provisions of this clause. The wages of every such laborer and mechanic
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employed by the Contractor or any.sub. ~,~ or engaged in the performance of
this contract shall be computed on a basic day rate of eight hours per day; and
work in excess of eight bourn per day is permitted only upon the condition that
every such laborer and mechanic shall be compensated for all hours worked in
excess of eight hours per day at not leas than one and one-half times the basic
rate of pay. For each violation of the requirements of this clause a penalty
of five dollars shall be imposed upon the Contractor for each ouch laborer or
mechanic for every calendar day in which such employee is required or permitted
to labor more than eight hours upon said work without receiving compensation
computed in accordance with this clause; and all penalties thus imposed shall
be withheld for the use and benefit of the Government.
ARTICLE 25. NONDISCRIMINATION IN EMPLOYMENT.
(a) In connection with the performance of work under this contract,
the Contractor agrees not to discriminate against any employee or applicant
for employment because of race, religion, color, or national origin. The
aforesaid provision shall include, but not be limited to, the following:
employment, upgrading, demotion, or transfer; recruitment or recruitmenrt
advertising; layoff or termination; rates of pay or other forma of com-
pensation; and selection for training, including apprenticeship. The
Co~ractor agrees to post hereafter in conapicuoua places, available for
employees and applicants for employment, notices to be provided by the
Contracting Officer setting forth the provisions of the nondiscrimination
clause.
(b) The Contractor further agrees to insert the foregoing provision in
all subcontracts hereunder, except subcontracts for standard commercial
supplies or raw materials.
ARTICLE 26. GRATUITIES.
(a) The Government may, by written notice to the Contractor, terminate
the right of the Contractor to proceed under this contract if it is found,
after notice and hearing, by the Director or his duly authorized representative,
that gratuities (in the form of entertainment, gifts, or otherwise) were
offered or given by the Contractor, or any agent or representative of the
Contractor, to any officer or employee of the Government with a view toward
securing a contract or securing favorable treatment with respect to the
awarding or amending, or the making of any determinations with respect to
the performing of such contract; provided, that the existence of the facts
upon which the Director or his duly authorized representative makes such
findings shall be in issue and may be reviewed in any competent court.
(b) In the event this contract is terminated as provided in paragraph (a)
hereof, the Government shall be entitled (i) to pursue the same remedies against
the Contractor as it could pursue in the event of a breach of the contract by
the Contractor, and (ii) as a penalty in addition to any other damages to which
it may be entitled by law, to exemplary damages in an amount (as determined by
the Director or his duly authorized representative) which shall be not less
than three nor more than ten times the costa incurred by the Contractor in
providing any such gratuities to any such officer or employee.
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(c) The rights and remedies of the Government provided in this clause
shall not be exclusive and are in addition to any other rights and remedies
provided by law or under this contract.
ARTICLE 27. EXCUSABLE DELAYS.
The Contractor shall not be in default by reason of any failure in
performance of this contract in accordance with its terms (including any
failure by the Contractor to make progress in the prosecution of the work
hereunder which endangers such performance) i! such failure arises out of
cauaea beyond the control and without the fault or negligence of the
Contractor. Such cauaea include, but are not restricted to: acts of God
or of the public enemy; acts of the Goverxmient; fires; floods; epidemics;
quarantine restrictions; strikes; freight embargoes; unusually severe
weather; and failure of subcontractors to perform or make progress due to
such causes, unless the Contracting Officer shall have determined that the
supplies or services to be furnished under the subcontract were obtainable
from other sources and shall have ordered the Contractor in writing to
procure such services or supplies from such other sources, and the Contractor
shall have failed reasonably to comply with such order. Upon request of the
Contractor, the Contracting Officer shall ascertain the facts and extent of
such failure and, if he shall determine that such failure was occasioned by
any one or more of the said causes, the delivery schedule shall be revised
accordingly.
ARTICLE 2$. EMPLOYMENT OF ALIENS.
No aliens employed by the Contractor shall be permitted to have access to
the plans or specifications, or the work under construction, or to participate
in the contract trials, without the written consent beforehand of the
Director or his duly authorized representative.
ARTICLE 29. ASSIGNMENT OF RIGHTS.
No assignment of any of the Contractor's rights under this contract shall
be made.
ARTICLE 30. TERMINATION.
(a) The performance of work under the contract may be terminated by the
Government in accordance with thin clause in whole, or from time to time in
part, (1) whenever the Contractor shall default in performance of this
contract in accordance with its terms (including in the term "default" any
ouch failure by the Contractor to make progress in the prosecution of the
work hereunder as endangers such performance), and shall fail to cure such
default within a period of ten days (or such longer periods as the Contracting
Officer may allow) after receipt from the Contracting Officer of a notice
specifying the default, or (2) whenever for any reason the Contracting Officer
shall determine that such termination is in the best interests of the Government.
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"~
Any such termination shall be effected by delivery to the Contractor of a Notice
of Termination specifying whether termination is for the default of the Cantrsctor
or for the convenience oY the Government, the extent to which performance of
work under the contract is terminated, and the date upon which such termination
becomes effective. If, after notice of tera~iaation of this contract for
default under (1) above, it is determined that the Contractor's failure to
perform or to slake progress is performance is due to cansea beyond the caatrol and
without the fault or negligence of the Contractor pursuant to the provisions of
the clause of this contract relating to excusable delays, the Notice of Teriaina-
tion shall be deemed to have been issued under (2) above, sad the rights and
obligations of the parties hereto shall in such event be governed acc4rdiagly.
(b) After receipt of a Notice of Termination and except as other~rise
directed by the Contracting Officer, the Contractor shall (1) stop work
under the contract on the date. and to the extent specified in the Aotice of
Termination; (2) place no further orders or subcontracts for arterials,
services, or facilities except as say be necessary for completion of such
portion of the work under the contract as is not terainated; (3) terstiaate,.
all orders and subcontracts to the extent that they relate to the perforance
of work terainated by the Notice of Termination; (~+) assign to the
Government, in the manner and to the extent directed by the Contracting
Officer, all of the right, title, sad interest of the Contractor under the
orders or subcontracts so terminated, in which case the Government shall gave
the right, in its discretion, to settle or pay any or all claims arising oat of
the termination of such orders and subcontracte,;(5) with the approval or
ratification of the Contracting Officer, to the extent he any require, which
approval or ratification shall be final and conclusive for all purposes of this
clause, settle all outstanding liabilities and all claims arising out of such
termination of orders sad subcontracts, the cost of which Mould be reimbursable
in whole or in part, in accordance with the provisions of this contract;
(6) transfer title (to the extent that title has sot slresdy been transferred)
sad, in. the manner, to the extent, and at the tines directed by the Con-
tracting Officer, deliver to the Govermaent ( i) the fabricated or unfabri-
cated parts, work in process, completed work, supplies, sad other material
produced as a part of, or acquired in respect of the performance of, the
work terminated by the Notice of Termination, (ii) the completed or partially
comppleted plans, drawings, information, and other property which, ii the
contract had been completed, would be required to be furnished to the Government,
and (iii) the digs, dies, and fixtures, and other special tools and tooling
acquired or manufactured for the performance.of this contract for the cost of
which the Contractor has been or will be reimbursed under this contract;
(7) use its best efforts to sell in the mrnne;, at the times, to the extent,
and at the price or prices directed or authorized by the Contracting Officer,
any property of the types referred to in provision (6) of this paragraph,
provided, however, that the Contractor (i) shall not be required to extend
credit to any purchaser, and (ii) say acquire any such property under the
conditions prescribed by and at a price or prices approved by the Contracting
Officer; and provided further that the proceeds of ax~y such transfer or
disposition shall be applied in reduction of any payments to be made by the
Government to the Contractor under this contract or shall otheririse be credited
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to the price or coat of the work covered by thin contract or paid in ouch
other manxier ab the Contracting'bfficer may direct; (8) complete performance of
ouch part of the work as shall not have been terminated by the Notice of
Termination, and (9) take ouch action as may be necessary, or as the Contracting
Officer may direct, for the protection and preservation of the property related
to thin contract which is in the possession of the Contractor in which the
Government has or may acquire ari iaterest. The Contractor shall proceed
immediately with the performance of the above obligations notwithstanding arty
delay in determining or adjusting the amount of the fixed-fee, or an,,y item of
reimbursable coat, under this clause. At any time after expiration of the
plant clearance period, as defined in Section VIII, Armed Services Procuresent
Regulation, as it may be amended from time to time, the Contractor may submit
to the Contracting Officer a list, certified as to quantity and quality, of arty
or all items of termiaatio~ inventory mot previously disposed of, exclusive of
items the disposition of which has been directed or authorized by the Contracting
Officer, and may request the Government to remove such items or eater into a
storage agreement covering theme. Not later than fifteen (15) days thereafter,
the Government will accept title to such items and remove them or enter into a
storage agreement covering the same, provided that the list submitted shall be
aub~ject to verif ication by the Contracting Officer upon removal of the items,
or if the items are stored, within forty-five (45) days from the date of
submission of the list, and ~Y necessary ad~ustmeat to correct the
list as submitted shall be made prior to final settlement. ,
(c) After receipt of a Notice of Termination, the Conrtractor shall
submit to the Contracting Officer its termination claim in the form sad with
the certification prescribed by the Contracting Officer. Such claim shall
be submitted promptly but in no event later than two years from the effective
date of termination, unless one or more extensions in writing are granted by
the Contracting Officer upon request of the Contractor made in writing within
such two-year period or authorized extension thereof. However, if the Contracting
Officer determines that the facts ~uatify ouch action, he may receive and act
upon any such termination claim at anyy time after ouch two-year period or any
extension thereof. Upon failure of the Contractor to submit its termination
claim within the time allowed, the Contracting Officer may determine, on the
basis of information available to him, the amount, if any, due to the Contractor
by~reason of the termination and shall thereupon pay to the Contractor the
amount so determined.
(d) Subject to the provisions of paragraph (c), the Contractor and the
Contracting Officer may agree upon the whole or any part of the amount or
amounts to be paid (including an allowance for the fixed-fee) to the
Contractor by reason of the total or partial termination of work pursuant
to this clause.. The contract shall be amended accordingly, and the Contractor
shall be paid the agreed amount.
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(e) In the event of the failure of the Contractor and the Contracting
Officer to agree in whole or in part, as provided in paragraph (d) above,
as to the amounts with respect to costs and fixed-fee, or as to the amount of
the fixed-fee, to be paid to the Contractor in connection with the termination
of work pursuant to this clause, the Contracting Officer shall determine,
on the basis of information available to him, the amount, if e~y, due to the
Contractor by reason of the termination and shall pay to the Contractor the
amount determined as follows:
(1) If the settlement includes cost and fixed-fee
(i) There shall be included therein all coats and expenses reimbursable
in accordance with this contract, not previously paid to the Con-
tractor for the performance of this contract prior to the effective
date of the Notice of Termination, and such of these costs as may
continue for a reasonable time thereafter with the approval of or as
directed by the Contracting Officer, provided, however, that the
Contractor shall proceed ss rapidly as practicable to discontinue
such costs.
(ii) There shall be included therein so far as not included under (i)
above, the cost of settling and paying claims arising out of the ter-
mination of work under subcontracts or orders, as provided in para-
graph (b)(5) above, which are properly chargeable to the termi-
nated portion of the contract.
(iii) There shall be included therein the reasonable costs of settlement,
including accounting, legal, clerical, and other expenses reasonably
necessary for the preparation of settlement claims and supporting
data with respect to the terminated portion of the contract and for
the termination and settlement of subcontracts thereunder, together
with reasonable storage, transportation, and other costa incurred in
connection with the protection or disposition of termination inventory;
provided, however, that if the termination is for default of the
Contractor there shall not be included ar~q amounts for the
preparation of the Contractor's settlement proposal.
(iv) There shall be included therein a portion of the fixed-fee payable
under the contract determined as follows:
(A) In the event of the termination of this contract for the con-
venience of the Government and not for the default of the Con-
tractor, there shall be paid a percentage of the fee equivalent
to the percentage of the completion of work contemplated by
the contract, less fixed-fee payments previously made hereunder.
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(B) In the event of the termination of this contract for the default
of the Contractor, the total fixed-fee payable shall be such pro-
portionate part of the fee (or, if this contract calls for articles
of different types, of such part of the fee as is reasonably al-
locable to the type of article under consideration) as the total
number of articles delivered to,and accepted by the Government
bears to the total number of articles of alike kind called for by
this contract.
If the amount determined under this paragraph is less than
the total payment of fixed-fee theretofore made to the Con-
tractor, the Contractor shall repay to the Government the excess
amount.
(2} If the settlement includes only the fixed fee, the amount thereof will
be determined in accordance with subparagraph (e)(1)(iv) above.
(f) The Contractor shall have the right of appeal, under the clause of
this contract entitled "Disputes," from any determination made by the
Contracting Officer under paragraphs (c) or (e) above, except that if the
Contractor has failed to submit its claim within the time provided in para-
graph (c) above and has failed to request extension of such time, he shall
have no such right of appeal. In any case where the Contracting Officer
has made a determination of the amount due under paragraph (c) or (e)
above, the Government shall pay to the Contractor the following: (i) if
there is no right of appeal hereunder or if no timely appeal has been taken,
the amount so determined by the Contracting Officer, or (ii) if an appeal
has been taken, the amount finally determined on such appeal.
(g) In arriving at the amount due the Contractor under this clause there
shall be deducted (1} all unliquidated advance or other unliquidated payments
theretofore made to the Contractor, (2} any claim which the Government may
have against the Contractor in connection with this contract, and (3) the
agreed price for, or the proceeds of sale of, any materials, supplies, or
other things acquired by the Contractor or sold pursuant to the provisions
of this clause and not otherwise recovered by or credited to the Govermo~ent.
(h) In the event of a partial termination, the portion of the fixed-fee
which is payable with respect to the work under the continued portion of the
contract shall be equitably adjusted by agreement between the Contractor and
the Contracting Officer, and such adjustment shall be evidenced by an
amendment to this contract.
(i) The Government may from time to time, under such terms and con-
ditions as it may prescribe, make partial payments and payments on account
against costs incurred by the Contractor in connection with the tert~inated
portion of the contract whenever in the opinion of the Contracting Officer
the aggregate of such payments shall be within the amount to which the Con-
tractor will be entitled hereunder. If the total of such payments is in
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excess of the amount finally determined to be due under this clause, such
excess shall be payable by the Contractor to the Government upon deaand,
together with interest computed at the rate of 696 per annum, for the
period from the date such excess payment is received by the Contractor
to the date on which such excess is repaid to the Government; provided,
however, that no interest shall be charged with respect to an~y such excess
payment attributable to a reduction in the Contractor's claim by reason of
retention or other disposition of termination inventory until ten days after
the date of such retention or disposition.
(~) 1'he provisions of this clause relating to the fixed-fee shall be
inapplicable if this contract does not provide for payment of a fixed-fee.
(k) Unless otherwise provided for in this contract, or by applicable
statute, the Contractor Prom the effective date of termination and for a
period of six years after final settlement under this contract, shall preserve
and make available to .the Goverment at e11 reasonable times at the office
of the Contractor, but without direct charge to the Government, all its
books, records, documents, and other evidence bearing on the cost and
expenses of the~Contractor under this contract and relating to the work
terminated hereunder, or, to the extent approved by the Contracting Officer,
photographs, micro-photographs, or other authentic reproductions thereof.
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~ ~ ~T
IIRTIC~ 2. SCCaP.~ a)~+' ;~~~~:CT art
1 3
~~Snee~i~ Alodels o? a Pc.ssive ~sa.te:.'cept Recxiving
SfStei;l geneY'E~I.Zy Z11 Q,CC02.'CiwIICG' ?ri'~.?~;i: 'G~1C ~'pdT'~@nt OY
7ef'snse RYii3.b~ t, ~citled "k~LII ~.' ~'a-r~.t:~ rLe Receiving
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